Gold prices continue to be restrained by concern about an interest rate hike by the Federal Reserve.

Gold prices were off to a bad start on Monday and Tuesday, after the previous two weeks brought some excitement for goldbugs.  Monday’s rise in oil prices gave stocks a boost, to gold’s detriment.  On Tuesday, a proposal by Greek finance minister, Yanis Varoufakis, to replace his nation’s bailout debt with growth-linked bonds, raised hopes for a resolution of the stalemate between Greece and its lenders.  As a result, gold’s “safe haven” appeal faded as investors’ risk appetites increased.

The only positive day for gold prices was Wednesday, after the European Central Bank announced that as of February 11, it would no longer accept Greek sovereign debt as collateral.

Friday’s release of the January non-farm payrolls report by the Department of Labor’s Bureau of Labor Statistics sent the spot price of gold plunging 2.51 percent, to close at $1,233.30 per ounce.   The better-than-expected news that 257,000 new non-farm payroll jobs were added, intensified concern that the Federal Reserve would advance the “lift-off” of its increases to the federal funds rate from September to June.  The increased dollar strength from that situation crushed gold prices.

The chart below depicts the trading activity in the SPDR Gold Trust ETF (NYSEARCA:GLD) during the past 180 days (Chart courtesy of Stockcharts.com ).

After rising above its 200-day moving average (currently: $120.56 per share) on January 15, GLD continued to climb higher, until January 22, when it began a stair-stepping decline, which was punctuated by Friday’s 2.59 percent plunge, pushing GLD back below its 200-day line.  GLD managed to find support at its 50-day moving average (currently: $117.80), ending Friday’s session at $118.64 per share.

GLD’s Relative Strength Index (RSI) dropped to 45.20 from last week’s 59.89.  The MACD is falling below the signal line, suggesting that GLD could continue to decline during the immediate future.

The last word:  Because gold prices are measured in dollars, a stronger dollar pushes gold prices lower. The dollar enjoyed a big boost on Friday, as a result of renewed fears that the Federal Reserve would be in a hurry to start raising the federal funds rate because of the strong January jobs report.  The surge in dollar strength caused gold prices to sink.